NEW YORK (TheStreet) -- Consol Energy (CNX) shares are up 1.77% to $35.58 in early market trading on Thursday after the coal and natural gas company announced that it was preparing to spin off some of its coal operations.
The company said that its board of directors authorized it to pursue the formation of a master limited partnership (MLP) for its thermal coal business. The MLP would own interests in several of the company's Pennsylvania-based mining operations including the Bailey Mine, Enlow Fork Mine and Harvey Mine.
The company plans to commence its initial public offering of the MLP in mid-2015, after which Consol Energy will own the general partner, the incentive distribution rights and a majority of the limited partner interest in the MLP.
Separately, the company also announced plans for a two-year $250 million stock repurchase program.
TheStreet Ratings team rates CONSOL ENERGY INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONSOL ENERGY INC (CNX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 97.4% when compared to the same quarter one year prior, rising from -$63.65 million to -$1.65 million.
- CONSOL ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONSOL ENERGY INC reported lower earnings of $0.35 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.35).
- In its most recent trading session, CNX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for CONSOL ENERGY INC is rather low; currently it is at 21.34%. Regardless of CNX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.19% trails the industry average.
- You can view the full analysis from the report here: CNX Ratings Report